* Sanctions to include sectors such as Russian defence finance (Updates with quotes, sanctions details)

BRUSSELS, Sept 2 (Reuters) - European Union governments will decide on a package of new sanctions against Russia by Friday, Italian Foreign Minister Federica Mogherini told the European Parliament on Tuesday, calling for "the strongest possible response."

Mogherini, who will be the bloc's next foreign policy chief, said the European Commission, the EU executive, will present a strengthened package of sanctions against Russia over its military invasion of Ukraine by Wednesday.

EU ambassadors will meet on Thursday and Friday and the decision will be taken by Friday, Mogherini said.

"We need to respond in the strongest possible way," Mogherini told reporters following a presentation to EU lawmakers in the European Parliament.

"Things on the ground are getting more and more dramatic. We speak about an aggression and I think sanctions are part of a political strategy," she said. She also described the situation as "a time of complete darkness."

Mogherini declined to give details of the sanctions package but said they would target Russia in four sectors, which include defence, dual use goods and finance.

Three people close to the discussions told Reuters on Monday that the strengthened sanctions could include banning Europeans from buying new Russian government bonds, limiting Moscow's ability to finance itself.

EU leaders decided at a summit on Saturday that the direct engagement of Russian troops in the war in eastern and southern Ukraine called for a stepping up of the sanctions imposed so far unless Russia pulled its soldiers back.

German Chancellor Angela Merkel, who led the push for a tougher EU response, said on Monday that Moscow's behaviour in Ukraine must not go unanswered, even if sanctions hurt the German economy, heavily dependent on imported Russian gas.

At Saturday's summit, EU leaders chose Mogherini to be the bloc's next foreign policy chief, succeeding Briton Catherine Ashton when she steps down in October.

Mogherini, whom some eastern European states have criticised for being too soft on Russia, sought to strike a firm tone on Tuesday, saying the situation in Ukraine had changed because of Russia's behaviour and the EU-Russia relationship was no longer a partnership.

"A strategic partnership is over. Clearly it's over and that was Moscow's choice ... We have a problem on the Ukrainian territory. We have a conflict, clearly," she said.

Mogherini also said she spoke by telephone on Monday to Russian Foreign Minister Sergei Lavrov, who congratulated her on her appointment as EU foreign policy chief, but said she did not discuss policy in detail. (Reporting by Jan Strupczewski, Robin Emmott; editing by Adrian Croft and Giles Elgood)